Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
ETF Securities launch brings US treasuries to the ASX
ETF Securities is expanding its product suite into the fixed-interest sector by offering two listed bond funds. The new funds are:
- ETFS US Treasury Bond ETF (ASX Code: USTB, currency hedged) – Gains its exposure to the index by investing in DWS Group’s Xtrackers II US Treasuries UCITS ETF. (DWS is a leading global fund manager with €850 billion of assets under management.) Tracks the iBoxx $ Treasuries Total Return Index, hedged into Australian dollars. The index is market capitalisation-weighted and tracks the performance of bonds issued by the US government.
- ETFS USD High Yield Bond ETF (ASX Code: USHY, currency hedged) – Gains its exposure to the Index by investing in DWS Group’s Xtrackers USD High Yield Corporate Bond ETF.
The launch of a US Treasury Bond fund and a USD high-yield corporate bond fund comes at a time where US interest rates are rising and investors are rushing into US Treasuries in record pace. USTB will be the first pure-play exposure to US Treasuries available to Australia retail investors.
Most US Treasuries are available for ASX investors but via a listed bond fund containing many other bonds. Australian retail investors have had no access to a pure-play investment in US Treasuries until now, despite the US government debt market being the deepest and most liquid of any type of financial instrument, with more than US$23 trillion of outstanding Treasuries.
ETF Securities head of product Evan Metcalf said, “Fixed-income securities play an important role in investment portfolios. Their returns generally have a low correlation to equity returns, which provides portfolio diversification.
“And over time, they have low volatility. This means they provide yield with relatively low risk. Investors often compare the yield on government bonds to the higher yield on dividends from equities. What they ignore is that to capture that dividend yield they must invest in an asset class with double-digit annual volatility.
“These investment options are perfect for investors like retirees or SMSFs who are seeking peace of mind, and low-risk asset classes.”
Kanish Chugh, head of distribution at ETF Securities added: “We will continue to offer innovative and timely products to the market and this launch marks the start of our new growth strategy, especially in light of Mirae Asset and Global X ETFs’ acquisition of our business.
“We are excited to work with Global X ETFs, and to dip into their vast research capabilities and experience. As a leading provider of ETFs we will continue to offer solutions for investors to build portfolios across the spectrum, whether it’s defensive, growth, income or alternatives,” said Chugh.
Metcalf concluded by saying, “Fixed income markets have had mixed results over the past year but long-term the asset has proved its value as a core holding, providing investors with yield at relatively low risk.”
